Several state and local governments have explored this space of taxing digital goods, but the new laws have some language variants and potential loopholes that could spark legal debates in the future. For instance, the city of Chicago enacted a tax on “cloud” services, while Connecticut’s law is ostensibly about digital downloads, but the way “downloads” is then explained includes any transmission without “tangible personal property,” which would seem to cover streaming as well.
Government has often been accused of moving too slowly to accurately reflect the speed of technology’s impact on day-to-day life, and this seems to be another example. Many of the new taxes appear to be motivated by budget shortfalls more than anything else, and it’s a questionable choice to piggyback on this new technology without also taking steps to fully understand the nuances of it.